Wealth Gap in America Caused by Federal Reserve, Not Capitalism

Policy Mic
April 27, 2012

When most people hear about the redistribution of wealth they think of welfare payments and health care for the elderly, but the real redistribution of wealth is from the 99% to the 1%, not the other way around. The rapid expansion of the money supply by the Federal Reserve does not flow into the economy evenly, but is added in at distinct points.

The most distinct of these points is through the too-big-to-fail banks. Access to the new money first means these banks can buy assets and drive up prices in the stock market, benefiting themselves and the 1% that make up their best clients. By the time this new money has time to flow out into the broader economy; the 99% see no benefit and in fact suffer from higher prices.

The real cause of the increasing disparity in income levels in the U.S. is not capitalism, but central planning from the Federal Reserve. Continuing expansion of the money supply and artificially low interest rates are maintained by a process in which the Fed buys assets from the major banks and the richest Americans at inflated prices, or lends money to them at low rates that they can then use to buy assets at inflated prices.

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This article was posted: Friday, April 27, 2012 at 10:56 am

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